is a natural resources company with licences to mine heavy minerals sands in Mozambique containing titanium dioxide ore.

Transcription

1 is a natural resources company with licences to mine heavy minerals sands in Mozambique containing titanium dioxide ore.

2 Disclaimer Important Notice Reliance on this document for the purposes of engaging in any investment activity, including entering into a Proposed Transaction, may expose the Recipient to a significant risk of losing all the sums invested. If the recipient is in any doubt about the investment to which this document relates, he should consult an authorised person specialising in advising on purchases of, or investments in, shares of unlisted and listed companies. In particular, the document contains certain statements, estimates and projections with respect to Pathfinder Minerals Plc (and it s associated companies) and as to the market for its producers and services. Such statements, estimates and projections reflect various assumptions made by the management of Pathfinder Minerals Plc concerning anticipated results, which assumptions may or may not be correct. The information in this document will not form any part of a contract. Furthermore, it does not offer capable acceptance and no binding commitment may be entered into on the basis of the document. Nor does anything in this document constitute any representation, warranty or indemnity, express or implied, by Pathfinder Minerals Plc, its directors, employees or agents, in relation to any proposed transaction and no such director, employee or agent has authority to make or give such representation, warranty or indemnity, whether orally or in writing. 2

3 Pathfinder Minerals: The Opportunity Pathfinder Minerals plc (AIM: PFP) is a natural resources company listed on the AIM market of the London Stock Exchange with licences to mine heavy minerals sands in Mozambique, southern Africa Pathfinder Minerals two licences cover approximately 32,000 hectares of land. They are located approximately 50km south of Kenmare Resources plc s producing Moma mine, and are known to contain titanium dioxide bearing minerals of ilmenite and rutile, as well as the mineral zircon The minerals of ilmenite, rutile and zircon are used in the manufacture of a wide range of products across a number of industrial sectors The Company believes that global supply of titanium dioxide (TiO 2 ) and zircon will be in a significant structural deficit by 2013 with only a limited number of known new sources of significant supply A detailed feasibility study is currently being undertaken, with a view to developing the deposit for commercial extraction 3

4 Benefiting from BHP Billiton Pathfinder Minerals licences formerly belonged to subsidiary companies of BHP Billiton Our licences have long been known to contain heavy mineral sands Exploration work conducted on the deposits from the mid-1980s through to 2002 identified significant mineralisation BHP invested US$29M to: build infrastructure including a site camp, roads, bridges and airstrip drill over 3,000 boreholes for geological interpretation, data analysis and preliminary processing test work Bulk sampling and metallurgical test work conducted in support of prefeasibility and feasibility studies in the mid-1990s indicates that valuable heavy minerals can be recovered using conventional dredge mining, wet concentration and dry mineral separation processes Commercial circumstances at that time did not merit further development of the deposit and the project was placed on a care and maintenance basis 4

5 Recent History 2004 Companhia Mineira de Naburi (CMdN) acquired the Naburi Licence from BHP Billiton and obtained a 25 year Mining Concession 2009 IM Minerals Ltd acquired 75% of CMdN and funded it to acquire the Moebase Licence from BHP Billiton with Exploration rights for an aggregate $20m 2010 Consulting engineers, URS Scott Wilson, completed a Mineral Experts Report based on the historic information developed by BHP Billiton 2011 Pathfinder Minerals Plc acquired IM Minerals via a reverse takeover and, with it, a 100% interest in CMdN (whose minority shareholders became shareholders in Pathfinder Minerals Plc) URS Scott Wilson undertook a Scoping Study which indicated that the development of the Moebase and Naburi mineral sands deposits appears to be economically viable under present market conditions The National Directorate of Mines at the Ministry of Mineral Resources of Mozambique issued a new 25 year mining concession licence for Moebase enabling Pathfinder Minerals to move forward with mining concession status on both of its licences Pathfinder Minerals appointed Jacobs Matasis to execute a Definitive Feasibility Study over 12 months. Wardell Armstrong was appointed as Feasibility Study Manager. 5

6 Titanium and Zircon Feedstocks Ilmenite is widely used in the production of paint, paper, plastic, textiles, rubber, and pharmaceutical products, while 60% of global production occurs in South Africa, Australia and Canada Rutile and beneficiated ilmenite are the main minerals used to make titanium metal Titanium metal s unique properties, including its high strength-to-weight ratio, high melting point and its resistance to corrosion, make it the preferred metal for applications such as the manufacture of jet engines for the aerospace industry Titanium feedstocks are used to produce titanium dioxide pigment which is favoured for its brilliant whiteness, excellent opacity, non-toxicity and inertness Zircon is used in ceramics applications and chemical manufacture 6

7 Moebase and Naburi Mineral Resource Base 7

8 Historic Mineral Resource The historic mineral resource of Pathfinder Minerals licences was reported by URS Scott Wilson to be 2.02 billion tonnes, with a total heavy mineral content of approximately 3.55% - which is equivalent to approximately 71.7 million tonnes of contained heavy minerals Indicated (mt) 1,353 Grade(% hm) 3.33 Contained (mt) Inferred (mt) 668 Grade (% hm) 4.00 Contained (mt) Total Mineral Resource (mt) 3.55% = Contained Heavy Minerals: 71.68mt URS Scott Wilson downgraded BHP Billiton s previously Measured resource category to Indicated in the absence of physical core samples. It is anticipated that the corroborative drilling programme will enable this to be re-categorised as a Measured resource. 8

9 Historic Mineral Resource cont. Initial mining development will concentrate on the higher grade areas Deposit Tonnage (Million) Grade (% HM) HM Tonnage (million) TiO 2 Tonnage (million) Mine Life Moebase Years Lipobase Years Molocue Years Moebase intertidal Total Coastal Decksand Years Naburi Years Total Project

10 URS Scott Wilson: Asset Valuation URS Scott Wilson analysis demonstrated rising project valuations over the period from 2001 to mid 2009 for heavy mineral properties in terms of $/t HM Quantity of contained economic heavy minerals: = 71.7 million tonnes On a NPV (10 % discount rate basis): = $529m Valuations below based on a production schedule of 1.245m tpa of ilmenite (93.4% of total final product), 24,000 tpa of rutile (1.74%) and 65,000 tpa of zircon (4.78%) Using Scoping Study conservative pricing assumptions: Ilmenite $125/t $155,625,000 Rutile $677/t $16,248,000 Zircon $1148/t $74,620,000 TOTAL ANNUAL PRODUCTION REVENUE $246,493,000 Using Canaccord Genuity Limited Long Term Price forecast (20 April 2011): Ilmenite (Avg price for IL 1,2,3) $175/t $217,875,000 Rutile $875/t $21,000,000 Zircon $1454/t $94,510,000 TOTAL ANNUAL PRODUCTION REVENUE $333,385,000 10

11 Summary of Scoping Study Notes Estimated Run of Mine Production 47,000,000 t/pa Total Run of Mine cost estimated at $79 million per annum Estimated Life of Mine 30 years Estimated Mineral Content Split of Final Product ilmenite: 93.4% rutile: 1.74% zircon: 4.78% Similar to Kenmare s Moma mine Estimated Annual Production ilmenite: 1,245,000 t/pa rutile: 24,000 t/pa zircon: 65,000 t/pa Projected Annual revenues $246,493,000 $333,385,000 using Canaccord Genuity Long Term Price Forecast pricing Direct Capital Cost $533 million Estimated IRR 18.8% Increases to >30% using Canaccord Genuity Long Term Price Forecast pricing Estimated Net Present Value $529 million 11

12 Pathfinder Minerals: Kenmare 2? Kenmare Resources, a UK-listed ilmenite, rutile and zircon producer on the nearby Moma licence, has more than a decade s operating experience in Mozambique In 2010 Moma exported 718,788 tonnes of ilmenite, rutile and zircon It is the Directors belief that the Moma site s close proximity to the Naburi and Moebase sites suggests notable parallels in terms of mineral grade, operational costs and infrastructure-related challenges The market value of Kenmare Resources (FTSE250) has grown to in excess of US $1.3 billion Pathfinder Mineral s Strengths World Class Mineral Sands Deposit Second Mover Advantage $29m Spent by BHP Billiton Scoping Study Complete Feasibility Study complete in c.12 months 12

13 Mozambique Mozambique is a democracy which actively encourages foreign investment It is an attractive location for foreign investment with low corporation taxes and mineral royalties The country s infrastructure is constantly improving. Roads and bridges to our licensed area are being upgraded and maintained by the Mozambique government Kenmare s Moma Mine A substantial new power line is expected to be completed prior to the commissioning of the mine. This power line will run close to the mine site and be capable of powering Pathfinder Minerals mine and associated facilities 13

14 Distinguished Local Partners Our Mozambique operating team and substantial shareholders include: Major-General Jacinto Veloso (Non-Executive Director of Pathfinder Minerals Plc) After a highly decorated career in the Mozambique armed forces following the country s independence, General Veloso held many prominent government positions, including Minister of International Co-operation and Minister of State Security and National Intelligence. He has extensive top level international business, strategic and mediation experience Diogo Cavaco Mr Cavaco is a lawyer by profession but has broad experience as a manager of civil engineering, construction and public works projects. With dual Portuguese-Angolan nationality, Mr Cavaco s fluency in Portuguese, English, French and Spanish has proved invaluable. He is currently Chairman of Companhia Mineira de Naburi (CMdN), Pathfinder Minerals wholly-owned local subsidiary 14

15 Mining Process

16 TiO 2 Supply TiO 2 Demand Global supply is expected to be in a significant structural deficit by 2013 (Telegraph, September 2010) There are a limited number of known new sources of significant supply Several major titanium feedstock producers are expected to decrease future production as known resources reach the end of their mine lives, and efficiencies decrease South African feedstock producers face significant cost pressures from electricity tariff increases Industry inventories are at historically low levels Even with a 50% price increase annual supply growth may not meet historical demand growth (~3.5% p.a.) It is anticipated that despite current expansion plans such as those at Moma, there will be a shortfall of over 1 million tonnes of TiO 2 units by 2015 There is no viable substitute for TiO 2 at present It cannot be recycled and requires re-application Prospective buyers of TiO 2 span many industries and refine it accordingly for its specific end-use Zircon demand is likely to grow with increased demand for tiles and ceramic produce for continued urbanisation and construction in rapidly developing regions, notably in Asian - Pacific regions Ilmenite and rutile demand will similarly benefit from the construction industry growth as the demand for white pigment in paints and coatings (including architectural paints) increases Higher intensity of use and wealth effect in developing countries may create turbo charged demand (Iluka, August 2010) 16

17 Appendix 17

18 Board of Directors John McKeon, Non-Executive Chairman John McKeon was a founding shareholder of IM Minerals, which was acquired by Pathfinder Minerals in February Mr McKeon has considerable experience in the natural resources sector and is well connected, at government and ministerial level, with many of the natural resource ministries in Asia, Africa and the Middle East. He was a founding shareholder and former executive director of Circle Oil plc and is currently a consultant to a number of UK listed companies operating in the mining and oil and gas sectors. Nick Trew, Chief Executive Officer Nick Trew was a founding shareholder of IM Minerals, which was acquired by Pathfinder Minerals in February He co-founded International Mercantile Group Limited, a project management business which he has owned and run jointly with Gordon Dickie (non executive director) for the past 13 years. This followed a twenty year career in the energy insurance industry, latterly as a co-founder and director of Heath Oil & Gas, where Mr Trew specialised in the oil and gas sector with a particular expertise in construction and operational risk. James Normand, Finance Director James Normand is a Chartered Accountant. He trained at Spicer and Pegler (now part of Deloitte) where, after a twoyear secondment to 3i plc, he specialised in acting as the project manager of acquisitions by management buy-out and buy-in teams that he advised. For the past ten years Mr Normand has held management and finance officer roles for developing companies and charities. Major-General Jacinto Veloso, Non-Executive Director After a highly decorated career in the Mozambique armed forces following the country s independence, General Veloso held many prominent government positions, including Minister of International Co-operation and Minister of State Security and National Intelligence. He has extensive top level international business, strategic and mediation experience. 18

19 Corporate Information Date of Admission (reverse takeover): 10/2/2011 Shares in issue: 1,037,167,230 Warrants/Options : 128,666,667 Fully diluted: 1,165,833,897 Cash raised 22/7/ m 19

20 Significant Shareholders Shareholder % Holding John McKeon (Director)* Tim Baldwin* JV Consultores (Jacinto Veloso Director)* JP Morgan Asset Management 9.64 Nick Trew (Director)* 8.71 Gordon Dickie (Director)* 8.66 Diogo Cavaco* 8.50 Genesis Investment Management 8.29 *subject to 2 year lock-in (1 year hard / 1 year soft) from 9 February

21 The Major Titanium Feedstock Producers Are Expected to Decrease Their Future Production Rio Tinto Subject to energy cost increases in SA through RBM Facing challenges to further increase QMM capacity Iluka Waroona and Wagerup mines closed in 2009 Together, these mines in the SW of Western Australia produced 534kt of ilmenite and 20kt of zircon in 2008 Idled 2 of 4 synthetic rutile kilns in Western Australia Gingin mine closed in 2009 and Eneabba mine scheduled for closure in mid-2010 Partially offset by new mine development in Eucla Basin and Murray Basin producing predominantly zircon and rutile Key drivers of the supply constraint SA power provider Eskom expected to increase power prices by c.25% each year over the next 3 years impacting 20% of total TiO 2 production (slag producers) Existing operations are reaching full capacity and have limited expansion potential Limited number of known new sources of significant supply Global market share TiO 2 feedstock producers Other, 14% Exxaro Fairbreeze project discontinued and exited Toliara Sands Project in Madagascar Planned closure of KZN Sands subsidiary Subject to energy cost increases in SA Others Corridor Sands project in Mozambique discontinued by BHP Base Resources has the ilmenite Kwale project China is import dependent for ilmenite - over 1.3mt imported in 2009 Tata Steel s titanium project in India and Mineral Commodities Xolobeni deposit in South Africa have both been delayed Vietnam, 4% India, 7% China, 9% 1 Including 100% of RBM 2 Including 100% of Tiwest 3 Moma to grow to 7% in 2010 Kenmare 3, 5% Cristal, 3% Titania, 7% Rio Tinto 1, 27% Iluka, 13% Exxaro 2, 11% 51% Source: Kenmare Resources,

22 Global Supply/Demand Illustration kt of TiO 2 World World Supply Demand Demand 8,000 7,500 7,000 6,500 6,000 * Structural deficit of all titanium feedstocks by 2012 * Shortfall of over 1 million tonnes of TiO 2 units by ,500 5,000 4,500 4,000 3,500 3, Source: TZMI Ilmenite Study and Price Forecast 22

23 Demand in Pigment is Expected to Grow in Relation to GDP Growth Consumption intensity of TiO2 Source: TZMI 23

24 Mt of pigments China Has Been the Key Source of Growth in Pigment Demand Over the Last 20 Years 6 Pigment demand (mt) World China World excl. China CAGR =3.1% CAGR =2.1% CAGR =15.6% Source: TZMI Note: Dotted line represents respective average pigment demand growth rate over the period 24

25 Ilmenite, Rutile & Zircon Annual Pricing Forecasts 250 US$/t 1,400 1,200 US$/t 200 1, Ilmenite (blended) Rutile 3,500 3,000 2,500 2,000 1,500 U 1,000 US$/t U 3,500 3,000 2,500 2,000 1,500 1,000 US$/t Zircon Ilmenite (blended) Rutile Zircon Source: Mirabaud Securities price forecasts, Jan

26 Contact Details Head office: 4 Old Park Lane, Mayfair London W1K 1QW Telephone: Website: 26

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